T&T Oil Spills

The T&T Extractive Industries Transparency Initiative (TTEITI) Steering Committee has spearheaded efforts to encourage environmental transparency within EITI implementation.

In light of revisions to the EITI Standard and increasing global attention on climate change, the TTEITI Steering Committee made a strategic shift towards prioritising environmental transparency via its report disclosures. The new EITI Standard requires implementing countries to disclose material environmental payments to governments and encourages the disclosure of information related to environmental impact and monitoring.

In advance of this mandate, the TTEITI developed an environmental reporting pilot that emphasises disclosures on key indicators such as GHG emissions, water and energy use in operations and internal steps taken by oil and gas companies to reduce their carbon footprint.

The TTEITI reports also disclose existing environmental legislation, regulations and any gaps in monitoring. One of the key data points of the TTEITI’s work on environmental disclosures is oil spill data. Oil spills spiked from 51 in 2016 to 302 in 2023. For Q1 2024, there have been 55 oil spills with 89 barrels spilled and zero barrels recovered.

In 2023, T&T witnessed a surge in oil spills, both on land and in marine environments. The numbers marked an eight-year high in incidents.

According to Ministry of Energy data, there were 189 land-based and 113 marine oil spills recorded. This uptick is a six per cent increase when compared to the previous year.

However, as of the first quarter of 2024, there have been 55 oil spills. From 2016 through the initial quarter of 2024, the nation experienced 1,397 oil spills, with 75.2 per cent occurring on land. Among the affected areas, Forest Reserve/Fyzabad, Los Bajos/Palo Seco/Santa Flora, and Grand Ravine/Guapo/Pt Fortin/Cedros/Icacos were identified as key areas for onshore incidents.

The Ministry of Energy and Energy Industries (MEEI) set a threshold for spill reporting at just one gallon, whereas a single barrel of oil contains 42 gallons. Between 2016 and 2024, there was 91,758.84 barrels spilled, of which 83,514.63 were recovered. This translates to 3.8 million gallons spilled and 3.5 million gallons recovered. There’s a significant variation in barrels spilled across the years, with peaks in 2017 and 2021. However, the percentage of oil recovered fluctuates widely across the years. Interestingly, in 2017 and 2019, the percentage of oil recovered is notably high compared to other years. The monetary value of oil spilled during this period amounted to $3.5 million (net, after deducting recovered barrels).

The net value of spills is calculated based on the difference between the barrels spilled and those recovered, multiplied by West Texas Intermediate (WTI) average annual prices. Negative values indicate that more oil was recovered than spilled, which is a positive outcome for environmental and economic reasons. This occurred in 2019 (refer to chart 2). Positive values suggest economic losses due to spills, with the highest loss occurring in 2023 (refer to chart 2). Meanwhile, the gross value, without considering the recovered barrels, amounted to $32.5 million.

The Environmental Management Authority (EMA) plays a crucial role in addressing these incidents. Fines are levied based on the severity of the spills, with costs escalating according to the volume spilled and the effectiveness of recovery efforts. Importantly, there’s no minimum threshold for spill value triggering the use of escrow funds. The escrow fund, as defined in Article 37 of the Model PSC Contract 2018, is an interest-bearing account established in the Minister’s name at a designated financial institution. Its purpose is to accumulate funds contributed by the contractor to cover potential pollution, well abandonment, and facility decommissioning costs associated with petroleum operations in the contract area.

The contractor is required to deposit twenty-five cents per barrel of oil equivalent produced into this account from the date of first production.

Funds from the escrow account are utilised to finance the approved programme for abandonment and decommissioning of facilities, as agreed upon by the Minister and contractor. The total balance of the escrow accounts as of September 2021, stands at US$94 million.

According to the EITI Report 2021, the MEEI also has plans to enhance its spill-monitoring capabilities. This involves the procurement of early detection radar systems, aimed at bolstering the nation’s ability to swiftly respond to oil spill incidents.

The increase in oil spills seen in 2023 reinforces the need to protect the environment. It underscores the importance of proactive monitoring, having more stringent regulations in place, and investment as well as use of technology to mitigate impact. As the country grapples with the dual challenges of meeting energy demands while safeguarding the environment, EITI data disclosures provide a pillar for policy discussion on environmental stewardship.